Loans have guidelines

Sometimes, the cost or particulars of the project rule out certain loans: The HomePath and the streamlined 203(k) are restricted to renovations costing less than $35,000.

Loan limits are larger, but "the FHA 203(k) doesn't allow for 'luxury renovations,' like a pool, but FHA does allow for a detached garage, and not the HomeStyle," Marshall says.

Besides government loans, "It is very likely that a local, community bank will have their own loans based upon the (renovated) value of the property," says Ron Haynie, senior vice president of the Independent Community Bankers of America.

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